Students question the value of MBA’s in the current economic climate while the numbers of overseas students on business courses decline rapidly.
The MBA (Master of Business Administration) is generally considered to be the Holy Grail of education in business. It is often seen as essential training for budding entrepreneurs setting out to start their first businesses and for graduates hoping to ascend the senior management ranks in the corporate world. However sentiments are changing. Taking an MBA has always been expensive, but rising costs, the status of the economy and other factors are causing many graduates to question its value. Many consider that the best way forward is to skip the qualification completely and to focus on developing their careers and business ambitions.
Benefits of an MBA
The skills that are learned on MBA courses are valuable in all aspects of business and apply equally to those seeking high flying careers of who intend to develop their own business ideas. In general MBA graduates are able to secure significantly higher salaries than graduates without MBAs. There are also better career opportunities and around 70% of them go on to secure senior management roles and directorships. While many successful entrepreneurs consider a MBA to be essential, others believe that it is better to jump in at the deep end and learn on the job. For instance neither Richard Branson nor Sir Charles Dunstone has an MBA.
Saddled with debt
The cost of doing an MBA can be very high; tuition fees alone can amount to £60,000 not to mention accommodation, loss of two years’ salary and all the other expenses. The last thing any budding entrepreneur needs when starting out on a new business venture is to be saddled with debt. Cashflow is critical to any startup, and you don’t need an MBA in order to understand why.
A return on investment
On the other hand many MBA graduates have discovered that taking an MBA provides an excellent return on investment. Generally MBA graduates command high salaries and according to the Graduate Management Admissions Council, on average MBA graduates recoup the cost of their degrees within four years.
Declining numbers
Deciding to take an MBA is a high risk decision, and there has always been a balance between those who consider the risk to be worthwhile and those who don’t. Over recent years there has been a global trend for the number of MBA students to decline, and although globally that decline seems to have steadied during 2013, in the UK the number of students enrolling on MBA courses is still falling.
Overseas students
This trend is even more pronounced with overseas students. Traditionally overseas students have comprised around 86% of all students studying for an MBA in the UK, but their numbers are falling rapidly as illustrated by the diagrams below which show the total numbers of students and their percentage change in the top 18 UK business schools.
Visa restrictions
There are a number of reasons for this trend. While factors such as cost, the lack of funding, and the general state of the economy accounts for some of the decline, tightening up of visa restrictions has also played a significant part. These have meant that far fewer MBA graduates are employed in the UK following graduation; though in an attempt to reverse this trend Teresa May has lifted some of the visa restrictions. Recent changes mean that up to 1,000 MBA graduates a year will be able to stay in the UK for one year after graduating in order to start a new business or to work for a start up. They will then be able to apply to stay in the UK, but it is too soon for the impact of these changes to be assessed.